- Tech stocks cratering.
- Mortgage rates exploding.
- Slow net outflow of people and Little to no immigration.
Combined they can crush Bay Area real estate by 40+% but so far no dent. Thoughts?
I am seeing price drops on things that would have sold quickly 1–2 months ago. Be patient, this could take years to play out.
You have highlighted demand factors. What about supply factors? Cost of new construction and re- modeling are high and show no signs of dropping. Life expectancy are rising so not many selling houses.
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I think the replacement rate will be slower, since fewer people will be wiling to sell and move when rates are higher than their current mortgage.
I do think the yield of the bond fund needs to increase much more which would mean the price drops more. These bond funds are mostly held by pensions, institutions, and others which are very slow at moving their money. There should more downside as the fed starts increasing rates.
Mortgages being sold today are at 4% bond rate which is why the mortgage rates are over 5% now. The market moved the whole 1.75% of anticipated fed rate increases. Bond funds paying under 2% are basically garbage compared to buying bonds at current rates, but the market is slow to discount the bond funds. They haven’t seen the same 1.75% change.
Agree that the turnover will be lower than average since people will try to hold onto their older low interest rate loans. Still, mortgages will turn over for all sorts of reasons and be replaced with new originations at ~5%. It’s effectively an intermediate term bond fund so the damage is less than long term corporate or treasuries which have already lost 20–30%.
In general all asset classes move in tandem with some time gaps between their movements due to liquidity differences. When RE crashed in 2008 stocks followed.
With stocks cratering, bond’s cratering, growth and silly startups on the way to be totally decimated, RE will simply follow them albeit slowly. Hopefully the reset will stop at pre pandemic level but never know because the mortgage rates are certainly much higher than pre pandemic.
<2.75M & 4Bed - So many hot homes. Couple of friends are buying in East bay & South bay, still being quite competitive for them.
Yes overall Bay Area RE hasn’t budged, specifically the sale price. Number if sales have dropped but closing prices are still going up. No end in sight on when there will be u turn. If sellers literally refuse to accept any lower price then it’ll never turn.
Why would a seller with a 3% mortgage sell now when the next home they buy will have a 5% mortgage? Inventory is going to get very, very low. Selling makes sense for people cashing out and paying cash for a home elsewhere. That’s a very small number of people.
Listed at 3 and sold for 4.5. 50+% Overbidding is still alive.
https://www.zillow.com/homedetails/3760-El-Centro-St-Palo-Alto-CA-94306/19505574_zpid/
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Also small number of people selling houses to buy dirt cheap tech stocks.
Ppl couldn’t predict for next yr! How are they predicting 2030?! Also Austin not there!
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It’s just another article just like thousands written daily.
When it comes to home price growth potential, San Jose and Austin have similar outlooks with their Return Scores coming in at 61.3 and 61, respectively. But the risk profiles are very different. Homebuilders like Lennarand D.R. Horton are busy building sprawling subdivisions all around the Austin metropolitan area. Meanwhile, San Jose has scant new construction. That explains why Austin’s Risk Score (46.6) is more concerning than San Jose’s (74.6). If a housing correction comes to fruition, Austin has a much higher chance, according to our model, of temporarily becoming oversupplied. The same goes for fast-growing markets in states like Florida and Georgia.
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Prices in Austin went sideways during GFC 
Articles intentionally look at demand factors only or supply factors only to reach their preferred outcomes.
Though prices vary within those metropolitan areas, at least seven figures is common: The median sale prices in the cities of San Jose and San Francisco are $1.45 million and $1.53 million, respectively. Realtor.com reports the median listing price for both cities at $1.3 million.
The other figure determining affordability, median household income, is $119,136 in San Francisco and $117,324 in San Jose, according to the U.S. Census.
https://www.sfchronicle.com/bayarea/article/real-estate-affordable-housing-markets-17148926.php
https://www.redfin.com/CA/Castro-Valley/18387-Crest-Ave-94546/home/1929008
Bought in Jan for 740k, now listed at 949k with a cosmetic refresh, new kitchen and appliances. What’s it going to sell for?
OMG. we;ve hit the top…this is crazy
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